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Bus passengers will not have been surprised by a recent report from the Office of Fair Trading (OFT) accusing bus companies of milking public subsidies and taking advantage of the free bus passes enjoyed by the over 60s and people with disabilities.

Calvin Payne, Sheffield

Despite deregulation in the 1980s, bus companies now receive annual subsidies totalling £1.2 billion. Companies profit from successful routes while claiming public money to ‘subsidise’ the less profitable ones, such as those used by school children and the elderly. Public money is spent adding to the profits of some of the biggest companies in the country under the threat of service withdrawal or reduction.

These companies receive the equivalent adult fare whenever a free pass holder uses the service and have been accused of increasing fares on certain routes to take advantage of this arrangement.

The problem according to OFT is that there are not enough companies competing to run services. But whether in a monopoly situation, or with competition, private companies are still going to try to drive down wages and increase fares. In Sheffield some routes have seen fare cuts as a result of competing firms; however a couple of weeks after one firm increased fares by 20%, so did the other!

The OFT report also accuses large firms of undercutting smaller firms to drive them away, so any fare cuts are short-lived once that aim is achieved.

The Competition Commission is set to investigate the ‘unfair business practices’ of large bus companies. But a return to public ownership is not being considered by politicians or business friendly investigative bodies.

Amongst passengers though, that solution is still very much in mind and demanded. The cheap and good service run publicly in South Yorkshire until 1987 is still the benchmark as far as local passengers are concerned and is fondly remembered.

As well as passengers, the drivers and staff are angry at the current situation. Companies such as First and Stagecoach are attempting to freeze wages at a time of record profits and shareholder dividends. This has led to a series of strike ballots which are planned to culminate in nationwide action later this year.

If drivers and passengers can be united in one fight to restore public ownership, then fares could be cut, services maintained, and wages increased from current low levels back to their equivalent from regulated days. This task is down to campaigners and fighting union activists in the coming weeks and months.

Electrification of the London to Swansea rail line is good news for public transport users in the South West and the Government’s approval for Network Rail to meet the £1 billion cost is a demonstration of real commitment not just to the rail system, but also to combating climate change.

But for many people away from the main urban centres, what is needed is more than just faster journey times to London. They demand connectivity that reduces rural isolation, makes journeys faster, cheaper and easier and improves the economic prospects of smaller towns and villages.

This is where Go! Co-operative comes in, which is not only one of the newest co-ops to be established, but also the most recently established train operating company. Its prospectus for raising capital is about to be published, with the ambition of raising a quarter of a million pounds over the next two years.

Go! Co-op intends to be the fifth train operating company taking advantage of the principle of open access to rail lines that is enshrined in legislation and which is intended to increase the provision of services by sharing existing lines. This provision enables additional services to operate alongside the main rail franchises. Existing open access rail operators include Heathrow Express and Hull Trains.

However, Go! Co-op would be the first open access train provider running as a multi-stakeholder co-operative that brings together the interests of commuters, workers and the communities that would be served, via their local authorities. It is backed by some heritage railway operators.

The co-operative’s business planning is already well developed, thanks to seed-corn funding supplied by Co-operatives UK and the Co-operative Group, through the Co-operative Fund, backed by practical support from the Somerset Co-operative Services.

Go! is looking at various routes, including local branch line operations and longer cross country services. Some of these involve open access services on Network Rail lines, while others would operate in partnership with heritage rail and other independent railway owners.

At this stage, it is not possible to say which routes will be pursued — detailed studies on line capacity and passenger demand are needed first, as well as more negotiation with potential partners.

The chair of Go! Co-op is well known co-operative activist, Tim Pearce — the South West regional organiser for the Co-operative Party until he retired three and a half years ago.

“Existing train services run to London,” explains Mr Pearce. “Our intention is to serve other communities that don’t have good connections to anywhere. Cross-country connections are important. We are looking to potential routes in the south of England on existing rail networks.”

The Go! Co-op initiative has been given extra impetus by the recent publication of the Association of Train Operating Companies’ (ATOC) document Connecting Communities, which supports the principle of much improved connectivity for isolated communities by making greater use of lines that, at present, run few services. “We are interested in underused and also closed lines and closed stations, but that’s a lot of money,” says Mr Pearce.

“We are interested in the electrification, but that is a long time ahead, at least five years. It does raise interest in the rail network and the South West is getting a fairer crack of the whip than it has in the past.

“We want to develop routes in the South, but including the North. We are hoping to develop routes from the South to the Midlands, servicing the West Midlands conurbations, developing links where they don’t exist.

“We are trying to raise money from potential commuters and from councils along the rail lines. We will run it as a multi-stakeholder co-op.

“The communities that benefit will have control over the service. We envisage a scenario where the guy who pushes the trolley can be on the board. I have been very impressed by the results of [societies’] board elections where you get electricians and so on elected to the board.”

Mr Pearce’s involvement in the project arose from a motion put forward to Co-operative Party Conference in 2007, which called for the mutualisation of Network Rail. “We have made some progress there,” says Mr Pearce. “We still hope to get a result from that and are fairly optimistic.

“We then organised a conference last year [on Network Rail mutualisation]. That was successful. It had a lot of rail people and Co-op people there. Basically the idea [for Go!] started to gel about that time and because of that conference.” With that momentum established, one of the founders the project — Alex Lawrie of Somerset Co-operative Services — invited Mr Pearce to get involved.

The timetable for progress is as impressively ambitious as the project itself. The co-op has already been authorised by the Financial Services Authority to raise the funds. It is also working with the FSA to develop rules that allow for withdrawable and transferable Industrial and Provident Society share capital raised from members and outside investors. Outside investors will have enough voting power to protect their investment, but in accordance with co-operative principles the passenger and employee members between them will have effective control.

Go! believes, given the example of the major fund raising achieved by windfarm co-ops, that it can raise the necessary investment. Assuming it does so, it hopes to gain route authorisation some time next year and begin services in 2011.

Ultimately, Go! has aspirations even beyond this — its motivation is to improve connections between communities, not just to run rail services. So it would also like to be involved in running bus services that feed the rail services and perhaps operate bike hire and car clubs.

It is one of the most impressive and ambitious co-operative projects to come forward in many years. But it is also firmly grounded in a sense of realism — it deserves wide support.

That’s the question. Should we have public transport or a subsidised cash-cow for a man made wealthy by the state?

RAIL UNION RMT today stepped up their pressure on the government to remove National Express from their rail franchises as new research shows that the company has made nearly half a billion pounds in profits from their rail operations in the past 10 years while sucking in nearly £2.5 billion in public subsidy over the same period.

Just under two weeks ago Transport Secretary Lord Adonis announced that he was taking the failed National Express franchise on East Coast Mainline back into public ownership. Since then, the company have made bullish noises that they will fight to retain the rights to run the service and have also thrown down a gauntlet to the government over National Express East Anglia and c2c which they should be stripped of under the “cross-default” clause.

Today, Tuesday July 14, a parliamentary adjournment debate will take place under the title Rail Services on the East Coast Mainline led by York MP Hugh Bayley where a growing number of MP’s will be applying pressure on ministers for National Express to be stripped of their rail franchises.

Bob Crow, RMT general secretary, said today:

“It’s now two weeks since the government announced that they would be taking decisive action over National Express on the East Coast and we are stepping up the pressure for the company to be dumped as a matter of urgency and for their franchises to be nationalised on a permanent basis, not as a short term, crisis measure.

“National Express have been taking us all for a ride. Not only have they milked the best part of half a billion pounds out of their rail operations but they have sucked in £2.5 billion in public subsidies in the process.

“Now National Express are leaving a potential rail funding gap of £1 billion behind after their chaotic performance on the East Coast Mainline and once again it’s the travelling public and rail workers who are left to pick up the pieces. National Express, along with the rest of the rail privateers, should be kicked off the tracks for good.”

I’d go further than Bob – I’d like to see the privateers prosecuted for their theivery.

“RMT welcomes todays announcement by the Government on the renationalisation of the East Coast route but this shouldn’t be a short term, crisis measure.

“It should be a long term solution to the chaos that privatisation has brought to the UK’s most lucrative rail franchise.

“RMT’s national AGM will send a clear message to the Government today that they should strip National Express of their other franchises and use this opportuinity to begin the process of renationalising the rail network,” said Bob Crow.

John McDonnell MP, RMT Parliamentary Group Convenor, said:

“The public control of the East Coast Mainline franchise should be a stepping stone to full and permanent public ownership.

“This East Coast franchise should be used as a public sector benchmark – and if the public sector performs better then let’s have other franchises back in public ownership too.”

The government should go further. Under cross-default clauses, the Transport secretary, Lord Adonis, could strip National Express of all its contracts, now that the group has handed back one franchise.

The Green Party remains the only major party in Britain to call for the full re-nationalisation of the railways.

Rupert Read, candidate for Norwich North and Green Party spokesperson on public services, said:

“Train privatisation, from the beginning, was a very flawed model. We can’t keep socialising private companies’ losses and privatising their profits. We need a national train network under direct public control and with full public accountability.”

“National Express must pay back whatever monies are outstanding from their rail franchise of the East Coast Main Line – it would be quite wrong for National Express to continue to profit on some lines, while the taxpayer has to foot the bill on others. To use the government’s own rhetoric, this should be a zero-tolerance issue.”

Sir Richard Branson, co-owner of the Virgin west coast franchise, has expressed an interest in bidding for the east coast franchise if it became available.

Read responded to this by saying: “Virgin would then have control of England-Scotland services, as well as London to Birmingham, Liverpool, Manchester, Leeds and Doncaster. The entire idea of privatisation was to inject competition, and this would be substituting a public monopoly for a private monopoly. That cannot be allowed to happen, and as a Green MP for Norwich North, I would be absolutely steadfast in resisting it.”

PRIVATE TRAIN operators that have made hundreds of millions in profits at the public’s expense must not be allowed to cut services and jobs simply to keep their profits up, Britain’s biggest rail union says today.

RMT has urged Transport Secretary Geoff Hoon to give a resounding ‘no’ to expected attempts by the ‘big five’ rail operators tomorrow to win permission to operate fewer services than specified in their franchise agreements.

The union points out that rising revenues and rail profits made by the big five have fuelled rises in group dividends of between ten and 33 per cent (see attached analysis).

“If ever there was a case of greedy privateers wanting to have their cake and eat it this is it,” RMT general secretary Bob Crow said.

“The big five monopoly operators have been minting it at the public’s expense for more than a decade, handing over tens of millions of pounds in dividends to shareholders on the back of public subsidy, overcrowding and massive fares hikes

“Revenues, profits and dividends have been rising steadily, but at the first hint of a slowdown they want to slash services and sack staff when that is the reverse of what the economy and environment need.

“We already have operators threatening to sack staff and undermine the quality of service they offer by removing catering facilities and other front-line and service staff, and RMT will resist them with all the means at our disposal.

“Now we have the same privateers seeking to add to the downward spiral, and it is quite clear that they care nothing about the health of the economy, the environment or the services they are supposed to provide and everything about their shareholders’ bank accounts.

“We need a growing rail network that encourages people to travel by train through attractive fares, not least in these hard economic times

“If these parasites aren’t willing to run the level of services specified in their franchises they should hand back the keys and allow them to be run in the public sector where they belong,” Bob Crow said.

Boris Johnson’s New Year hangover for the capital- “Mayor hits Londoners in the pocket with fares rise”

Thursday, 01 January 2009 14:18

Tomorrow’s fare increase in London, which will see an above-inflation increase of six per cent overall and the price of a single bus journey on Oyster go up by eleven per cent – has provoked strong criticism from a cross party group. “At a time of financial crisis the Mayor should be helping Londoners by holding down fares and investing in key public services like transport – he is doing the opposite, hitting ordinary Londoners in the pocket,” said MP Jon Cruddas, former Mayor of London Ken Livingstone, Assembly members Len Duvall, Jenny Jones, Darren Johnson, and Val Shawcross, and Steve Hart – regional secretary of transport union Unite, in a joint statement.

They called for the fare increase to be reversed and criticised the loss of millions of pounds of income for Transport for London since Boris Johnson became mayor which could have been used to avoid the painful rise.

In their statement the cross-party group said:

“The Mayor of London plans to raise fares by six per cent, with some increasing far more: the price of a single bus journey on Oyster will go up by 11 per cent, to £1.

“Yet at the same time the Mayor has cancelled investment to improve the city’s transport system, and is throwing away millions of pounds by cancelling measures like the planned £25-a-day charge on the worst-polluting cars, like Chelsea Tractors, in central London and taking one of the richest parts of London, Kensington and Chelsea, out of the Congestion Charging Zone.

“At a time of financial crisis the Mayor should be helping Londoners by holding down fares and investing in key public services like transport: he is doing the opposite, hitting ordinary Londoners in the pocket.

“We demand that this January’s above-inflation fare increase be cancelled.”

Despite attempts to bribe Mancunians into adopting an englarged version of London’s congestion charge, as the first step in making drivers pay to use roads across the country, the promise of hundreds of millions of pounds of investment could not win a majority.

A large majority of Greater Manchester’s electors voted against the regressive scheme, a pet project of New Labour which was unwisely supported by the Green Party because of the investment in public transport.

In a referendum, the proposal was defeated by a majority of 4 to 1, meaning there is now little chance of a pay-as-you-drive scheme being introduced for at least a decade. Sir Neil McIntosh, the returning officer, said 1.03m votes were received – a response rate of 53.2%.

Of those, 79% were against.

Voters were unimpressed by the promise of £1.5bn of government money for public transport, and 10,000 extra jobs created by the construction of tram lines and improved buses and trains. Instead, the public appeared to regard it as an extra tax for motorists, which would cost individuals up to £1,200 a year.

The result is an embarrassment to the government, which created a £2bn fund dedicated to supporting local charging schemes. The fund is likely to be reallocated to other projects or become a victim of budget cuts.

The city’s yes campaign may not have been helped by the decision of Boris Johnson, the mayor of London, to abolish the western extension of the capital’s charging zone. It is expected that other cities that had been considering schemes, including Cambridge, Bristol and Leeds, will abandon their plans.

Labour politicians in Manchester had worked closely with ministers at the Department for Transport to try to convince voters. A vitriolic campaign was fought between the yes and no camps.

Had it gone ahead, the charge would have been introduced in 2013, by which time 80% of the public transport improvements would have been completed. There would also have been discounts for the low-paid and exemptions for parts of the city that had to wait longer for improvements.

Motorists would have paid to cross two charging rings during the morning and evening rush hours. The outer ring roughly followed the orbital M60, while the inner ring surrounded the city centre.

Graham Stringer, MP for Manchester Blackley, who opposed the charge, said: “I am delighted with the result. It’s a brave politician that goes forward with such a scheme, unless it is an extraordinarily good scheme that virtually everybody benefits from.”

He said the result showed there was hostility to road charging: “You have to come up with an extremely good scheme whereby you reduce other road taxes if you ever want road pricing by consent in this country.”

Stringer said it was a pity that three years had been wasted on the “ill thought out” scheme. He said officials must now go back to the government to talk about how they can invest in trams, trains and buses for Greater Manchester.